Stock Market Heads For Impressive Performance To Close 2017

By Nse Anthony-Uko

(Sundiata Finance) – Equities trading on the Nigerian Stock Exchange (NSE) for the month of December began on the positive note, as capital market operators see stocks market record overall impressive performance for the year and a positive December ending.
Research has shown that for 13 years, from 1998 to 2016, the month of December on the NSE has closed in the green, making the month a reasonably predictable one for traders and investors to play their cards positively while investing for short-term returns with composite NSE All-Share index averaging 2.56 per cent within the period.
Analysts noted that this suggests that “crossing into the last month of the year creates opportunities for traders to make money by investing intelligently in stocks that are season-driven, imbued with strong numbers and about to breakout a resistance level. They could be those reversing from a support level and have strong trend ability and momentum.”
The Christmas/year-end season has over this period proven to be the most exciting time to trade. The caution remains that such trading must be knowledge-based and the year 2017 has seen most major sectoral indices reach week-highs.
However, analysts ruled out a 100 per cent certainty that the indicators would close green in December, like it has done in the last 13 years. However, using market data, the historical statistics look appealing, with changes in market conditions often pointing to a rally as the calendar year ends.
Meanwhile, the stocks market so far has seen a bullish year, driven by foreign inflows that provided liquidity also for the economy, helped by the sustained Central Bank of Nigeria (CBN) intervention in the FX window of the inter-bank market since April 21.
This, to a great extent, has supported the Naira’s exchange rate against major global currencies, while reducing the impact of imported inflation. Also, it is impossible to wish away the impact of this on the continued positive economic data. Analysts point to expansion in the nation’s manufacturing sector helped by easier access to forex for their much needed raw materials as revealed by the November Purchasing Managers Index (PMI) at 55.9 point. This added to the positive impact of the rising oil price which means more money for government to implement its spending plan.
As of the close of trading activities on December 5, 2017, the stocks market index Year-To-Date (YTD) return was at 41.30 per cent, while capitalisation grew by N3.885 trillion. Stocks market performance for November showed that the ASI rose by 1,264.31 basis points or 3.45 per cent, from 36,680.29 basis points to 37,944.60 basis points. Similarly the market capitalisation gained 520 billion to close at N13.215 trillion from N12.695 trillion at the end of October.
It could be recalled that most analysts predicted at the beginning of the year that stocks market will close on the strong positive performance, after declining for three consecutive years.
The chief executive officer of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema was one of those who have been very confident that the market would recover and post a positive 2017 performance.
According to Onyema, the capital market is a sub-sector of the Nigerian economy and the World Bank had projected that the economy would recover from its recession this year with a modest growth of 0.6 per cent.
He therefore said based on the positive forecast and the initiatives being put in place by the NSE, investors should be optimistic about recovery of the market in 2017.
For the sectors to look at as the year winds down, the chief operating office of InvestData Consulting Limited, Mr. Ambrose Omordion urged investors to let Sectors’ performance and earnings so far in the year guide choice before tailoring it down to individual stocks on the strength of earnings surprises and expected payout at the end of the year.
According to Omordion, for now, Consumer Goods, Banking, Services, Industrial goods and Agribusiness are worth considering.
“In the month, November inflation figure and third quarter Foreign Trade reports are expected from NBS, as well as the full-year earnings report of Vitafoam.
“Again, we advise that investors allow numbers guide their decisions while repositioning for the rest of the year’s trading activities, especially now that stock prices remain volatile amidst improving company, economic and market fundamentals.”
Also, the managing director of HighCap Securities Limited, Mr. David Adnori said, the stocks market had been on the upswing due to improvement in forex supply as well as the creation of I&E window, saying that the impact of the success recorded at the window has been evident in the performance of the NSE as a number of stocks have rallied on the back of bullish sentiments and there is further room for upside in some stocks.
He pointed out that positive macro-economic indices which confirmed the nation’s improved recovery have continued to impact basic indices of the NSE.
He explained that with the improved economic data and current trading pattern, it is likely that trading in the month of December remains positive as seasonal changes and impact of oil price remain at play in the market.
Analysts from APT Securities and Funds Limited said “We expect the market performance in December to further react positively in anticipation for fourth quarter result and also impressive economic indicators in third quarter suggest a promising trading sessions ahead.”
Also, analysts from Cordros Capital Limited added that there is possibility of momentum profit taking during the month of December, noting that the outlook for equities remains broadly positive as market fundamentals amid improving macro-economic conditions remain strong.

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